7/02/2009 @ 5:00PM

Boomers Move To Self-Employment

The news again is grim. Unemployment rates in June continued to climb for those aged 55 and older–to 7.7% for men and 6.4% for women, up from 3.1% and 3%, respectively, in December 2007.

Sure, that’s lower than the national 9.5% rate. The problem is, once older workers lose their jobs, they have trouble finding others.

Fortunately (for those in this age group and for the economy), older workers have recently demonstrated they have a plan B: Work for themselves.

Over the past decade, the highest rate of new-business creation has been posted by the 55 to 64 age group, Dane Stangler, senior analyst at the Kauffman Foundation, a Kansas City, Mo., charity devoted to entrepreneurship, notes in a new report, “The Coming Entrepreneurship Boom.” Using data from the Kauffman Index of Entrepreneurial Activity, the study finds that from 1996 to 2007, Americans aged 55 to 64 averaged a rate of entrepreneurial activity roughly one-third higher than those aged 20 to 34.

Sure, Bill Gates started Microsoft when he was 17, and “25 entrepreneurs under 25″ sounds sexier than “50 entrepreneurs over 50.” But the reality is that many entrepreneurs–those who will hopefully lift us out of the recession–are older folks.

“The image of the 20-something entrepreneur obscures the trends that have persisted for a decade,” Stangler says.

The older-entrepreneur phenomenon predates the current recession. For example, a Kauffman survey of 5,000 firms started in 2004 showed that 18% of the founders were 55 or older.

The migration of older workers to self-employment helps explain a seeming anomaly in the job numbers. Even as their unemployment rate grows, so too does the total employment of those 55 and older.

The newly self-employed are helping drive those employment numbers up, says Sara Rix, an economics analyst at AARP’s Public Policy Institute. From December 2007 to June 2009, the total number of older workers in nonagricultural industries rose 2% to 28.4 million, while the subset of older self-employed workers in nonagricultural industries increased by 10% to 2.84 million.

Older folks are taking buyouts, being laid off or coming out of retirement and going to work for themselves. Some are even tapping into their retirement savings to start their own businesses (see “The IRA Job Machine”).

Looking forward, these boomer entrepreneurs aren’t going to be going back to corporate jobs, Stangler predicts. Rather, they’ll be starting another round of businesses, or at least mentoring a new group of entrepreneurs. (If you’re starting a new venture, check out the free resources at the Service Corps of Retired Executives at www.score.org for 50-plus entrepreneurs.)

So if you’re looking for a silver lining in the latest unemployment numbers, it might be this: According to Stangler, well over half of the largest companies in the U.S. and close to half of the fastest-growing firms were founded during previous recessions or bear markets. “This might be the start of a new entrepreneurial era,” he says.